Oil market shrugs as Saudi Arabia digs deeper to rescue declining prices

Saudi Arabia’s endeavours to shore up global oil prices before the planned listing of Saudi Aramco was faced with a shrug from the markets as traders were keen on US shale.

The world’s biggest oil maker swore to cut further into its export volumes and take a harder position against nations which neglect to stick to their recognised targets.

Saudi energy minister Khalid al Falih additionally told the meeting of the Opec and non-Opec makers in St Petersburg that it would struggle for the group’s coordinated oil supply cap to be stretched out through the start of next year if the current deal is not enough to drain the glut of global oil supplies.

Despite the new set out to shore up oil costs, the market response was restricted to a humble 1pc rise to just over $48.50 a barrel, after Nigeria said it has no plans to support its rising production beyond the cartel’s agreed cap.

However, the oil price is still well below the $50 price not long ago and highs of around $56 prior this year because of worry over rising US shale production which is not operated by the joint Opec and non-Opec deal.

Erik Norland, an economist at CME markets, stated the price reaction was “not an especially big move by the standards of the oil market”.

“The market’s muted reaction stems from the fact that today’s developments leave the existing agreement little changed with production still rising in Opec members Libya and Nigeria, as well as in non-Opec nations such as Canada and the United States,” he said.